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SEC chief accountant unlikely to support further convergence efforts

The US Securities and Exchange Commission (SEC)'s chief accountant James Schnurr has indicated that there is little interest for further and full convergence of IFRS and US GAAP and that he is unlikely to recommend further actions US to SEC chair Mary Jo White, according to his speech at the 2015 Baruch College Financial Reporting Conference.

Shnurr's advice was requested by White upon his appointment in October last year; he was mandated to recommend the SEC's future course of action on the further incorporation of IFRS into US capital markets.

In his speech, Schnurr said there was "virtually no support" for the SEC to mandate IFRS for all registrants and added further: "there is little support for the SEC to provide an option allowing [US public] companies to prepare their financial statements under IFRS."

However, he added, "there does seem to be continued support for the objective of a single set of high-quality globally accepted accounting standards."

Despite the fact his comments have been heralded as dealing the final blow to the convergence debate, he added recent discussions among SEC constituents had highlighted "continued support for the objective of a single set of high-quality, globally accepted accounting standards."

"When the accounting standards diverge, it is generally because the boards followed their respective standard setting processes, listened to their constituents and made decisions that were best for the constituents that they support," he said.

Nonetheless, he praised both the bodies' [IASB and FASB] joint contribution to the recent progress towards a single set of global accounting standards and the greater understanding of their respective constituent bases the collaboration had fostered.

Despite Schnurr's insistence that the relationship between the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) remains open, he admitted: "While I am optimistic about the future and the prospect of continued collaboration between the FASB and IASB, I am also realistic."

He added: "It is fair to say the FASB and IASB collaborative relationship is at a critical juncture."

A long time coming
Schnurr's words have been heralded by some as the nail in the coffin of the convergence process, seen to have been winding down over the past few months.

At the end of March, SEC commissioner Kara Stein expressed hope in uncertainty, saying she believed the debate should continue.

Despite imperfections in both sets of standards, she said she was not convinced that providing financial statements in two different sets of accounting standards would be beneficial for either investors or issuers.

"We can adopt the best of what we have here in US GAAP, in IFRS, and the best of the new thinking out there," she added.

However, last month newly appointed president of French standards setter Autorité des normes comptables (ANC) Patrick de Cambourg described standard setting as "entering a new geopolitical era".

Speaking to The Accountant he said "today we have to acknowledge that it won't happen, at least in a foreseeable future."

"Today the geopolitics of standard setting has changed because of the end of the convergence process between IFRS and US GAAP."

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